Closely-watched case may spell trouble for software patents

The ACLU, EFF, and the End Software Patents Project have all filed amicus …

Two of the nation's leading civil liberties organizations and a new organization dedicated to the abolition of software patents have all filed amicus briefs in a patent case that could give the courts an opportunity to revisit the issue of software and business method patents. The case involves an application for a patent that would cover "a method for managing the consumption risk costs of a commodity" through a series of financial transactions. Not surprisingly, the Patent Office rejected the application on the grounds that purely abstract ideas are not patentable.

The applicant, Bernard Bilski, the CEO of a small firm called WeatherWise, appealed the patent office's decision. Last fall, the case was heard by the US Court of Appeals for the Federal Circuit, which has jurisdiction over patent issues. But rather than issue a ruling, the Federal Circuit decided to rehear the case en banc, meaning that the case will be re-heard before all of the Circuit's judges. Amicus briefs were due this week, and a number of organizations weighed in. Ars looked at three briefs from prominent public interest organizations.

ACLU: Patents don't trump the First Amendment

The ACLU's brief is a rare foray into patent law for an organization that has focused on more traditional civil liberties issues like free speech and privacy. The ACLU's interest was piqued by the breadth of the claims in Bilski's patent application. In essence, the patent covers not a discrete machine or process, but a broad class of financial transactions. Indeed, the ACLU points out that it is not even necessary for any financial transactions to take place—merely attempting to initiate the transactions described in the patent could be sufficient to trigger liability.

Which, the ACLU points out, means "All that is necessary in order to violate the claim is that the seller have in his or her mind a purpose (to minimize risk) and engage in two conversations." It's not hard to see how this would raise First Amendment issues. The ACLU asks the Federal Circuit to reaffirm the traditional patent law doctrine that abstract ideas are not patentable. Or, if the court is unwilling to do that, then the ACLU suggests that the court should squarely address the First Amendment implications of patenting abstract ideas.

EFF: rein in patents on abstract ideas

The EFF brief, which was also signed by Consumers Union and Public Knowledge, took a broader view of the case, asking the court to revise the series of 1990s decisions that have opened the floodgates to the patenting of software, business methods, and other abstract "inventions." EFF asked that the Federal Circuit explicitly require that inventions be "technological"—that is, related to a physical device or process. Purely abstract ideas such as the one at issue in Bilski would be disallowed as "non-technological."

EFF proposed a new five-factor test to sort out which patents are "technological." The prongs of the test are based on the Supreme Court's landmark rulings on the patentability of software, which date from the 1970s and early 1980s. EFF's proposed test is designed to prevent applicants from obtaining patents by adding a trivial "physical" element to a fundamentally abstract concept. For example, merely executing software (an abstract idea) on a computer (a physical device) would not render it "technological."

End Software Patents Project: every company is a software company

Ars covered the launch of the End Software Patents Project back in February. Like the EFF brief, the ESP brief argues that the key Supreme Court precedents rule out patenting software and other abstract ideas. The ESP brief also points out that unlike the pharmaceutical or automotive industries, the "information processing industry" is the entire economy. A patent on a new drug or a new automotive design is likely to only affect a relatively small number of companies in those industries. But almost every large organization develops software for its own use.

That means that virtually any organization is vulnerable to claims of patent infringement for engaging in ordinary information-processing activities. The ESP Project has compiled a list of firms that have been sued for violating software patents. The list includes Foot Locker, Walgreens, the Green Bay Packers, and the Weather Channel. These are not software companies, yet because of the de facto legalization of software patents, they now face liability for developing or using run-of-the-mill software in their businesses.

Will the Federal Circuit listen?

The US Court of Appeals for the Federal Circuit has faced mounting criticism from almost everyone for its handling of patent issues. The US Supreme Court has slapped down the Federal Circuit's overly permissive standards for obviousness, and several Supreme Court justices have expressed doubts about the patentability of software. Meanwhile, concerns over excessive patent litigation have spurred Congress to consider a patent reform bill of its own, albeit a relatively timid one. And disputes like the BlackBerry patent battle have created a steady drumbeat of bad press for the patent system.

The Federal Circuit's decision to rehear the Bilski case en banc may be a sign that the Federal Circuit is hoping to stem the tide of criticism my tightening the rules for patenting abstract ideas. We can only hope they will listen to the advice of public interest groups that are strongly signaling that such patenting has gotten out of control.

Timothy B. Lee / Timothy covers tech policy for Ars, with a particular focus on patent and copyright law, privacy, free speech, and open government. His writing has appeared in Slate, Reason, Wired, and the New York Times.